Premium, Charges, Fees, and Collateral
Money is the highest-risk area on the exam. Questions test the 10% premium, permissible charges, collateral custody and the difference between earned premium and refundable collateral.
Premium and charges
- The filed rate is 10% of the bond amount; it is earned when the bond is posted and the defendant is released. Do not rebate, split or discount it.
- Any additional charge must be disclosed, agreed in writing and lawful; hidden "processing," "gas" or "paperwork" fees are a discipline trap.
- If the bond is never posted, premium taken must be returned; once posted, refunds are limited by the agreement and statute.
Collateral
- Collateral belongs to the indemnitor and is held in trust; give a receipt describing cash, property or title.
- Do not commingle collateral with operating funds; use a separate trust account and reconcile it.
- Return collateral promptly after exoneration, less only lawful, documented charges; provide an accounting.
Worked example. A $50,000 bond generates a $5,000 premium. The indemnitor gives $8,000 cash collateral. The agent must receipt $8,000, deposit it in the trust account, and record it separately from the $5,000 premium. On exoneration, the agent returns the $8,000 unless a written, lawful charge applies; the premium is not returned merely because the case ends early.
Traps: quoting "10% plus fees" without itemizing; using collateral to pay office expenses; treating premium as collateral; failing to return a title or deed.